The natural gas market is cooling down as the price of natural gas tumbled down during last week. Based on the recent EIA update, last week’s buildup in natural gas storage was higher than the five year average. Will natural gas further decline? Let’s examine the latest changed in the natural gas market.
During the previous week, the Henry Hub (short term delivery) fell by 3.9%. Moreover, United States Natural Gas (UNG) also decreased by 4.1%. As of last week, the price of Henry Hub was nearly $1.75 per million BTUs higher than the price during the same week last year. The recent decline of natural gas price may have slightly contributed to the fall of shares of major natural gas and oil producers such Chesapeake Energy (CHK): During last week, Chesapeake’s stock declined by 0.9%. If natural gas will keep falling it could lower the expected revenues of Chesapeake and thus adversely affect the company’s value.
According to the latest EIA weekly update, the underground natural gas storage rose (for the eighth time this season) by 111 Bcf to reach 2,252 Bcf. In comparison, the storage rose by 62 Bcf during the same week last year and by 94 Bcf based on the five years average. The current storage for all lower 48 states was 21.5% below last year’s storage and 3% below the 5-years average.
From the demand standpoint, during last week, the average U.S NG consumption rose by 3.6% (week over week).
For the rest of the report see at Seeking Alpha.
For further reading see “Will Natural Gas Remain Low in 2013?”